My question is regarding a US based company (A), selling/importing an electromechanical module to a Chinese company in Beijing (B) for 100, and company B will process and assemble it into a complete product (with additional cost 300 + profit 100 = 400), selling / exporting to the US company A for 500.

What are the import /export tax and VAT considerations for each portion? Any VAT refund due to export? What if the US Company sets up an office in Hong Kong to process the import/export, any import/export tax benefit from this setup?

For general taxpayers who are engaged in the sales of goods or the provision of taxable services, VAT payable is the balance of output tax for the period after deducting the input tax for that particular period. Please click here for a special piece on China VAT Tips provided by China Tax and Consultants here in this Forum.